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CANDY CROWLEY, HOST: Changing faces and changing places. Very soon Washington will look and be different. In the 112th Congress convening in January, Republicans will have at least a 51-seat majority in the House, eight races still in limbo. In the Senate, the GOP will have six new seats for a stronger minority. Some analysis from the top.

(BEGIN VIDEO CLIP)

PRESIDENT BARACK OBAMA: No one party will be able to dictate where we go from here. We must find common ground in order to set -- in order to make progress on some uncommonly difficult challenges.

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CROWLEY: Finding common ground in a year the presidential election cycle begins will be the first uncommonly difficult challenge.

(BEGIN VIDEOTAPE)

CROWLEY: Today, from the state house to the White House, what the midterms mean for 2012 with two Republican governors, Rick Perry of Texas and Tim Pawlenty of Minnesota. Then, Congressman Chris Van Hollen on the way forward for Democrats. Plus, a conversation with Republican Senator-elect Pat Toomey of Pennsylvania, and analysis with Michael Duffy of Time magazine and Karen Tumulty of the Washington Post. I'm Candy Crowley and this is State of the Union.

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CROWLEY: In the post-election analysis, most of the attention has been on changes in Washington, but the impact of the 2010 red wave was wide and deep. Now Republicans want to make it lasting. Friday, the soon-to-be House Speaker John Boehner sent out a call for reinforcement, a letter to Republican governors, writing, "We have an opportunity for unprecedented collaboration on behalf of the American people in the effort to stop the expansion of federal power in Washington in hopes of returning power and freedom to states and individuals."

Joining me now, two of the country's most prominent Republican governors, Rick Perry of Texas and Tim Pawlenty of Minnesota. Thank you both very much for joining us. Let me start with you, Governor Pawlenty. It seems to me that the subtext of John Boehner's letter was you need to help us stop health care. You're an outgoing governor, but I want to ask you if you think that's a good idea.

PAWLENTY: I think it's a terrific idea, Candy, and good morning to you and good morning to Rick. I think Obamacare is one of the worst pieces of legislation passed in the modern history of the country. I'm doing everything I can in Minnesota to stop, delay or avoid its implementation in my state, including signing an executive order saying we're not going to participate unless required by law or approved by me. We've been given opportunities to early enroll in that program and take advantage of other aspects of it. We declined, and I hope between now and 2014 when it's fully kicked in that as many states as possible do what they can to reel that program back, or that the new Republican Congress, better yet, can repeal it, because it's dragging stuff into Washington, D.C., creating a new bureaucracy, spending a new -- a lot of new money that they don't have, isn't going to work. We should have market-based solutions.

CROWLEY: I want to show both of you, and Governor Perry, have you respond to this. This was from our CNN exit poll. The question was what should Congress do with the new health care law? Expand it -- 31 percent said yes. Leave it as it is -- 16 percent said leave it as it is. Repeal it, 48 percent.

So basically 47 percent of those who went and voted said either expand it or leave it alone; 48 percent repeal. So really there's a tie in the country. What kind of mandate is that?

PERRY: Well, you've gone from a lot of people thinking this might be a good idea to every day people find out the cost and -- my wife's a nurse, father-in-law a physician -- they understand intuitively that what this is going to do, if it goes into place or if it goes into as it is written, we will be rationing health care. Doctors will get away from Medicare, Medicaid type--

CROWLEY: But if you're listening to voters, as Senator McConnell says you want to do, the voters didn't say repeal this thing, stop this thing.

PERRY: I think they did.

CROWLEY: They pretty much split down -- but 47 percent didn't.

PERRY: Let me tell you -- let me tell you why they said that, and here is what's not penetrated really through to the public yet, is the cost of this.

The state of Texas, $27 billion more, over and above what we're already paying over the next 10 years, $2.7 billion every year. This is the type of money that will bankrupt states.

So people are looking at it from the standpoint of, well. does everybody need to have coverage, does everybody -- and I think intuitively folks say yes, but they haven't thought about the cost. You know, is this a great product to buy? Yes, but you don't know what the real cost is. Once you see the cost, it's kind of like, you know what, we can't afford that, so let's look at something else.

CROWLEY: Governor Pawlenty, also in these exit polls, we found that 52 percent of voters had an unfavorable opinion of Republicans. That is 10 percent higher than had an unfavorable view of Democrats. Your name often mentioned as someone who might want to run for president. I would think that those would be concerning numbers to you.

PAWLENTY: Well, I think the message of this election, Candy, primarily but not entirely related to the economy. People see and understand the economy is still in the doldrums, and when you mess with people's livelihoods, they come looking for you and they want change. And that's what happened. But it's not so much that people reembraced Republicans. It said they didn't like the direction President Obama and Nancy Pelosi and the Democratic Congress was taking the nation, and now they're at least opening the door to reconsidering supporting Republicans, and now we have to govern and lead and produce results. And if we don't, we'll be thrown out in two years.

And so I agree with the premise of your question. It's a second chance really for Republicans, not an affirmation of the great work we've done in the past. It's an open door for the future.

CROWLEY: Governor Perry, most Republicans, you among them, have said the federal government has got to stop spending money. Yet in Texas, you face an $18 billion deficit at least coming into January. Governor Pawlenty, although he's outgoing, has about a $6 billion deficit they're looking at in Minnesota, and yet you want the government to cut back, which necessarily means they will not be giving money to the states. Doesn't this just worsen your problem? There's an idea out there, let's cut spending but hold off on it. Pass a law to cut spending, hold off a year or two while everybody stabilizes themselves. What about that?

PERRY: Well, my book is called "Fed Up: Saving America from Washington," and that's exactly what the issue is. We don't have budget deficits in Texas because we have a balanced budget amendment there.

CROWLEY: Right, you have to cut spending or raise taxes.

PERRY: We have a shortfall -- cut spending -- that's right, that's the options in Texas. We had the same thing in 2003. We reduced, and that was a $10 billion shortfall back in 2003. We reduced that. We filled that gap without raising taxes. We'll do the same thing this time.

And I've told Washington no two times on unemployment insurance, $550 million, and also a billion-dollar plus program called Race to the Top on education. We told them no.

CROWLEY: But you also took billions in stimulus money that really helped with your budget, and let me just turn to Governor Pawlenty here and ask you the same question. This is a time when states really are facing record deficits. The problem is they've been cutting spending, they've been doing a number of things to try to bring these things under control, and now Republicans want the federal government to stop spending. Doesn't this really limit the things you can do and aren't the states looking to stop some of their services? PAWLENTY: You know, I don't think it's just Republicans that want the federal government or others to stop spending at excessive levels, and I think Rick's book "Fed Up" summarizes it really well, which is they're telling the federal government, tighten your belt, live within your means just like everybody else.

Candy, I echo what Rick just said about budgets. In Minnesota, we're required to balance our budgets, we've done it, and our budget deficit by the way is based on a projected increase by the bureaucrats that spending is going to go up on autopilot over the next two years 17 percent.

That's outrageous. That's ridiculous. It's way beyond anything that's going to be growthed in the private sector, and it is that kind of autopilot spending and entitlement spending and that kind of mentality that creates a lot of this problem.

And what we're saying, what Rick is saying, what I'm saying is government needs to live within the revenues that are available, and we need to have a growth in government or a reduction in government that reflects reality. And right now it's insulated from reality and people are sick of it.

CROWLEY: Governor Perry, one of the things I believe you say in your book -- and forgive me for not having read it yet -- is that you think perhaps dropping out of Medicaid, the state dropping out of Medicaid, and you have even talked about dropping out of the children's health insurance program, otherwise known as CHIPs. You've got the last time I looked about 3.6 million children disabled or poor in Texas who would then lose their health benefits. What happens to them if you opt out of Medicaid?

PERRY: What we think works very well -- and I totally agree with what Tim was talking about from the standpoint of those bureaucrats who are shooting these huge numbers forward -- but let me back to the issue at hand.

We would create our own insurance program for them. And I've had a waiver request for four years--

CROWLEY: But the government gives you 60 percent of the money to fund this. How does that add up to help you?

PERRY: We understand that's our money. You talked about us taking stimulus dollars. We send hundreds of billions of dollars to Washington, D.C., and generally don't get very much of it back. We'd just as soon not send as much money to Washington, D.C. Let us in the states come up with the ideas. I can promise you, Pawlenty and Jindal and Barbour and some Democrat governors across this country as well will come up with really good ideas about how to deliver health care. Why not let us pick and choose, rather than this one-size-fits-all mentality that comes out of Washington, D.C., with strings attached?

I've had a waiver for four years in front of Department of Health and Human Services, and haven't gotten an answer yet, to free us from the strings from Washington, D.C. That is the issue at hand. Let the states be the laboratories of innovation and the good ideas will come out of that.

(COMMERCIAL BREAK)

PERRY: And I can promise you, Pawlenty and I will go snitch from each other and put them in place in our states.

CROWLEY: Governor Pawlenty, last one to you, two questions, actually. First of all, will you run for president? And second of all, I'm going to show you a poll here, when we asked Republicans their choice for the nomination, Huckabee at 21, Romney 20, Palin 14, Gingrich 12, Pawlenty 3 percent. What do you make of that poll?

PAWLENTY: Well, I don't know for sure what I'm going to do after I'm done being governor, Candy. I'll decide that early next year. And as to the poll, you know, a lot of those early polls, whether it's me running or somebody else, reflect familiarity, name ID, and I -- you know, you see front-runners in the past with similar situations that change over time.

So these early polls I don't think mean much for me or any other potential candidates, especially if you haven't run before and aren't well-known.

CROWLEY: And if I could get just a yes or no from you, would repealing health care reform be a major part of your platform, should you run?

PAWLENTY: Yes, I think having health solutions dragged into Washington, D.C., top-down command-and-control, bureaucratically run entitlement programs that they can't afford are a bad idea. I like markets, I like people being in charge of decisions, not the federal bureaucracy.

CROWLEY: When we return, President Obama and the next speaker, John Boehner, a shotgun marriage if ever there was one.

(COMMERCIAL BREAK)

CROWLEY: They are sons of the middle class, both play golf, one smokes like a chimney, the other sneaks in a cigarette now and then. They've spent the election season wailing on each other. The soon-to- be speaker of the House, John Boehner, is passionate, sometimes emotional, and right of center. President Barack Obama is cerebral, always cool, and left of center. Feels like a shotgun marriage. (BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R), OHIO: The president and I had a very pleasant conversation. We agreed that we needed to listen to the American people, we needed to work together on behalf of the American people.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Can Democrats and Republicans sit down together and come up with a set of ideas that address those core concerns? I'm confident that we can.

(END VIDEO CLIP)

CROWLEY: Now, just to get down to the details of living together in the political arena.

(BEGIN VIDEO CLIP)

BOEHNER: We continue to believe that extending all of the current tax rates for all Americans is the right policy for our economy at this time.

OBAMA: I don't think that tax cuts alone are going to be a recipe for the kind of expansion that we need.

BOEHNER: The health care bill that was enacted by the current Congress will kill jobs in America, ruin the best health care system in the world, and bankrupt our country.

OBAMA: We'd be misreading the election if we thought that the American people want to see us for the next two years re-litigate arguments that we had over the last two years.

(END VIDEO CLIP)

CROWLEY: Oh, dear. Up next, a talk about Washington's new chemistry, the outgoing chairman of the Democratic Congressional Campaign Committee, a man who has had a rough week, Chris Van Hollen.

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CROWLEY: Joining me now here in Washington, the man who led the Democratic campaign effort in the House, Congressman Chris Van Hollen. And we both admit that rough week is a bit of an understatement for you at this point.

VAN HOLLEN: Candy, it was a very rough week, there's no sugar- coating that.

CROWLEY: And how rough week? I want you to take a look at the graphic that we have, and we're now looking at blue Democrat, red Republican, and it's pre-election where you all held seats. Now I want to switch it over and see how it looks now. There we go. OK, so basically the Midwest and the interior West just caved on you. What happened? VAN HOLLEN: Well, we saw convergence of a lot of events that created a perfect storm against the Democrats. You started with a difficult political playing field, which we said from the beginning posed a challenge. We had 84 House Democrats in congressional districts that George Bush had carried in the 2004 election, which was kind of a flat political year, not a big wind to anybody's back.

Only about five Democrats in congressional districts that John Kerry carried, which is why we always said we had a tough, tough playing field. You add to that a very difficult economy, 9.5 percent employment, and then you sprinkled into that tens of millions of dollars of largely secret special interest money and you get a Category 3 political hurricane.

It was tough. I mean, the only solace I can take from these elections is that the feedback we've gotten from our members from a campaign perspective, we gave them all the support and resources that they could possible have, but it was just -- yet they couldn't overcome what was clearly a big wave.

CROWLEY: But, you know, nowhere in here nor have I heard from the president that you see anything wrong in the policy that was passed. You think this was all kind of outside forces coming to bear that somehow fooled the American people into voting Republican.

I just looked at the suburban vote for Democrats, which dropped 11 percent in this election from the last one. You're now down to a 2 percent edge in the suburbs. You can't win a lot without the suburbs.

CROWLEY: So, you know, did you -- did you consider at all that there is something that went too far and that the American people are pushing back?

VAN HOLLEN: Candy, I don't think anyone thinks that the American people were fooled. I think what the American people were saying loud and clear is that the pace of the economic recovery, the continued large rate of joblessness is just unacceptable. And it is unacceptable.

CROWLEY: Particularly having spent $800 billion to try to get it down there.

VAN HOLLEN: Well, let's -- but the facts are the facts. I mean, there are 3 million more Americans employed today than there would have been without the economic recovery bill, so it's not that that failed, but what it did fail to do was to meet expectations, which was to come back on all cylinders.

And what people have said and we said all during the campaign, you know, it's tough to say it could have been worse, and that is a tough argument to make, and people were voting in the here and now, understandably not satisfied, impatient with the pace of recovery. That was what the referendum was all about.

(CROSSTALK) CROWLEY: But just to make sure, you don't think that the Democrats went too far and spent too much money on the stimulus or too much money on the TARP or went after the wrong thing and should have been focused on jobs for a year rather than health care. You think everything you did was good, that this was just something else or a confluence of events that made you lose this many seats?

VAN HOLLEN: We were responding to an emergency. The emergency began on George Bush's watch. Remember, it was George Bush and Secretary Paulson who initiated the bank rescue. Democrats joined with them to try and prevent a total meltdown. It was a terribly difficult vote. The economic recovery bill was absolutely essential to stabilize an economy that was in freefall.

It's undeniable that things have improved from 700,000 Americans losing their jobs, the month the president was sworn in, to now, where just last month we saw more positive signs.

But again, 9.5 percent unemployment is unacceptable, and I think that the clear message is everybody work together to get the economy back in full gear. And I think the Republicans make a big mistake if they interpret this as a mandate to do more than that, to try and turn things back over to a lot of the special interests that ran the show in Washington when they were in control.

CROWLEY: Let me ask you about the current relationship between surviving Democrats and the White House, because I've heard a lot of rumblings among Democrats, particularly on the more liberal side of it, and they say, look, the president's already talking about tweaking health care reform, that he might be open -- the White House talking about tweaking health care reform.

He's already signaled that he might give on tax cuts. And I've talked to liberals who have said, you know what, we need Nancy Pelosi as speaker to push back because the person we think that might undermine us is the president.

VAN HOLLEN: I don't think so for a second. Let me just take health care reform. What the president has said is if there are adjustments that people think need to be made to improve the bill, we'll do that. For example, there's this provision regarding 1099 that's gotten a lot of attention. It should not have been in there. In fact, in the House, we actually acted to take that out. We never got that change through the Senate. That kind of thing we should do. When it comes to taxes...

CROWLEY: But you don't think the president's going to sell back some of what you gained to moving toward the bill?

VAN HOLLEN: I think the president has been very clear when it comes to taxes, that adding $700 billion to the deficit in order to provide folks at the very top with a special tax break, when we know that that hasn't created jobs, because it's in place right now, that that's not acceptable to him.

So I don't see any sign of the president retreating from his principles, but I do see his willingness to reach out, and wherever reasonable and in the interests of moving the economy and jobs forward, he's going to work with the Republicans, as are the Democrats.

CROWLEY: I want to read you something that one of your delegation -- not delegation -- one of your caucus members said about Speaker Nancy Pelosi becoming a now minority leader. This is Jason Altmire, who told our Dana Bash, "I don't get the sense that Speaker Pelosi understands what happened on Tuesday. We lost middle America. The Democratic Party got crushed. I would rather have someone who understands middle America and someone who can relate to the districts we lost," which, as we all know, are the conservative districts and -- as we saw in that map.

Do you support Speaker Pelosi and can she be an effective spokesperson for the middle of the country?

VAN HOLLEN: Yes, and yes, she can. I mean, Nancy Pelosi has been fighting for middle-class America for the last 24 months. Together we've worked to rein in some of the special interests on Wall Street to give consumers a fighting chance. We've worked to make sure that patients get health care when they've been paying their premiums day in and day out and when they need it the most.

So the answer is yes. Look, on Tuesday this was a lot bigger than Nancy Pelosi. We lost over 607 state legislators. Nineteen state legislative bodies switched control from Democrats to Republicans. We lost a lot of governorships.

What this was all about, and understandably so, was a referendum on 9.5 percent unemployment and a feeling that we had not made enough progress. And people are right. We have not made enough progress and that's why we need to fight to continue to get us out of this mess.

And, look, in some ways the good news is our Republican colleagues now have to share some of the responsibility for getting us out of the mess that their policies helped to create in the first place.

CROWLEY: There could be, sort of, co-blame.

I want to ask you quickly, Congressman Hoyer, Congressman Clyburn both going for that number two position in a smaller Democratic Party. Is that a test of ideology and who do you support?

VAN HOLLEN: I don't think it's a test of ideology. And we're going to look for a way to make sure that both those members can stay in the Democratic leadership. They're both...

CROWLEY: Like a deal, somehow, to get one of them to stand down?

VAN HOLLEN: Well, I -- they're -- they're both going to be at the table, I'm absolutely convinced, in terms of helping provide guidance...

CROWLEY: And who do you like? VAN HOLLEN: ... guidance...

CROWLEY: I like both my members.

(LAUGHTER)

CROWLEY: Who would you vote for?

VAN HOLLEN: No, I -- they know who I'm supporting right now, but...

CROWLEY: Tell us.

VAN HOLLEN: No, but -- but this is, sort of, internal politics and it's not something you talk about on the air or announce a particular preference on the air, because it's not a preference over one person's leadership abilities over the other. These are very difficult decisions for the caucus. And I'm confident that the members of the caucus recognize that both gentlemen bring an enormous amount to the job, and we will work it out.

CROWLEY: Next, a new face among the Republican ranks in the Senate, Pat Toomey of Pennsylvania.

(COMMERCIAL BREAK)

CROWLEY: Joining me now from Allentown, Pennsylvania, that state's newly elected United States senator, Republican Pat Toomey.

Congratulations and thanks for joining us.

TOOMEY: Thanks very much, Candy.

CROWLEY: Let me start with something I found fascinating, given the remarks we've heard from Republican leaders, post-election.

CROWLEY: And that is when we talk to voters coming out in those exit polls, and said, what do you want to do first? What's most important to you? They are pretty much evenly divided on reducing deficit versus spending more to create jobs.

When you look at cutting taxes, it's way down the list, about 19 percent of people said cutting taxes, and reducing the deficit or spending more to create jobs was in the 40 percent range. Why then are we listening to Republicans talk about we've got to cut spending, we need to cut more taxes, when that's clearly not what voters had in mind?

TOOMEY: Well, Candy, you know, you can get the outcome you like from a poll depending on the way you word a question and the options you present to voters. I think what voters want us to focus on are two big things. The first is maximizing economic growth so that we get the job creation that comes with it that we need so badly. The second is that we put our federal government on a sustainable fiscal trajectory which we are not on now.

And these are related. Because if we don't get our fiscal house in order, we can't have maximum economic growth. I think those are the two big challenges that we face and that's what voters want us to focus on.

CROWLEY: It looks as though and already the Democrats are saying that you seem -- that you, meaning the Republican you, seem to be taking a mandate where no mandate was intended. That voters didn't go in there saying, yes, cut taxes, yes, cut spending, and that you all see this as a mandate perhaps to your own peril in two years.

TOOMEY: Well, I think we should be careful about how we interpret this election. I do think that many voters still remember being disappointed by Republican majorities. And I think this has not been a huge embrace of the Republican Party or the Republican brand.

But it clearly was a repudiation of an agenda that's not working and agenda in which the government has overreached dramatically in many, many areas, and in which the spending has been wildly excessive.

People understand intuitively that you can't borrow and spend your way to prosperity. These deficits are unsustainable. And I think they do want to us do something about it.

CROWLEY: You were around for much of the Bush administration when a lot of the spending took place that Republicans now are complaining about. What's different about you? What's different about the Republicans that's going to change this time around?

TOOMEY: Well, I was there for the first Bush administration, and, Candy, I spent most of my time in the House fighting my fellow Republicans. I thought we were spending too much money. I voted against the big new entitlement program. I tried to bring an end to earmarks. I personally wrote alternative budgets when I thought the Republican budget spent too much money. And I cobbled together a makeshift filibuster on the House floor when I thought Republicans were trying to bust the budget we had agreed to.

So I think my record is very clear. I was concerned about this problem many years ago. Now the problem is much, much bigger, because the current government has taken spending to a whole new really staggering proportions.

So I think most Republicans get this. We've just gone through an election cycle in which the voters have spoken, I think, very clearly about the need to rein in this government. So I'm hoping we'll have a new spirit among Republicans in Congress. CROWLEY: I guess I'm not sure how you can talk about the American people wanting the federal government to rein in their spending when 40 percent said we want the federal government to spend more money on creating jobs.

TOOMEY: Well, when you pose it that way, you know, are people answering that they want the creation of jobs or more spending of money? You tie those things together and give people a limited number of choices to a question that's designed to elicit a certain response, well, that's what you're going to get.

I think people understand that the job growth that is sustainable for our economy is going to come from the private sector, not from growing government. I think that's a message that came across really very clearly.

CROWLEY: Do you consider yourself a tea party candidate and would you join a tea party caucus?

TOOMEY: You know, I had very broad support from the tea party movement and I appreciate that support. You know, in my experience -- and I met with lots of folks who were active participants and others who were sympathetic to the tea party, in my experience, these are ordinary Americans, mostly working class and middle class Americans who love this country. They're very worried about its future, in particular they're worried about the mountain of debt that's being piled on to their kids' backs.

And so I'm very sympathetic to that concern as well. I welcome their support and I think they can play a very constructive role in keeping the Republican Party committed to the principles that we advocate.

CROWLEY: So would you join a tea party caucus in the Senate?

TOOMEY: I'd consider that. I'd want to hear what that's going to be all about, what that means. But I'd be open to that.

CROWLEY: And do you think -- a lot of people are looking at this and they're seeing the tea party on the one hand. We're now hearing from the Democratic side saying the Republicans aren't talking like they want to compromise. Why is this not a recipe for gridlock for two years, this new mix?

TOOMEY: Well, it depends on a lot of things. You know, after the '94 elections, there actually, despite the fact that President Clinton and many Republicans in the Congress didn't exactly get along terribly well, but there was real progress.

There were actual cuts in spending. We reached a balanced budget. There were cuts in the capital gains taxes. There were new trade agreements. There was welfare reform. And there was a strong economy.

So I think it is possible, and actually I'm encouraged by some of the things that President Obama has said recently. He has indicated that he has got some thoughts about lowering capital gains, at least in some cases. I think we should do that much more broadly to maximize the economic benefits.

He's in Asia right now promoting the virtues of expanding trade and increasing our exports around the world. He's exactly right about that. So I think there are opportunities and I hope we'll both reach out, both the president and his party, as well as Republicans, to focus on the policies that will maximize economic growth because that's what we need to focus on.

CROWLEY: Senator-elect Pat Toomey out of Pennsylvania, we will see you in Washington. Thanks for your time.

CROWLEY: Rocked by a brutal midterm election, a beaten president tries to find his moorings, moving to embrace a change not of his own making, without giving up ground. We have passed this way before.

(BEGIN VIDEO CLIP)

RONALD REAGAN, 40TH PRESIDENT OF THE UNITED STATES: We will work with them in a bipartisan fashion in an attempt to solve these problems. We won't compromise on principle of what we absolutely believe is essential to the recovery. What has been done so far is apparently working very successfully.

BILL CLINTON, 42ND PRESIDENT OF THE UNITED STATES: I will do everything in my power to reach out to the leaders and the members of this new Congress. But to those who would use this election to turn us back, let me say this, I will do all in my power to keep anyone from jeopardizing this economic recovery by taking us back to the policies that failed us before.

OBAMA: Why I want to engage both Democrats and Republicans in serious conversations about where we're going as a nation. With so much at stake, what the American people don't want from us, especially here in Washington, is to spend the next two years re-fighting the political battles of the last two.

(END VIDEO CLIP)

CROWLEY: Presidents Clinton and Reagan won re-election in their time. What's next for this president?

After the break, we're joined by Michael Duffy of Time magazine and Karen Tumulty of the Washington Post.

(COMMERCIAL BREAK)

CROWLEY: Joining me now here in Washington, Michael Duffy, assistant managing editor of Time magazine, and Karen Tumulty, political reporter for The Washington Post.

Great article this morning in the Post. We pulled out something from Governor Phil Bredesen of Tennessee, a Democrat. Here's what he had to say.

"There doesn't seem to be anybody in the White House who has got any idea what it's like to lie awake at night worried about money and worried about things slipping away. They're all intellectually smart. They've got their numbers, but they don't feel any of it, and I think people sense that."

So, sort of, a cry for a normal person in the White House?

(LAUGHTER)

TUMULTY: Well, I do think that -- and again, first of all, we are now in this, you know, first few days after a very traumatic event, and so you know, things always look very, very dire right after a moment like this.

But we did, as we were -- as Dan Balz and I were reporting this week, got a very clear sense that Democrats have been shaken both in their faith in Barack Obama's political gifts and their confidence in the skill of this political team.

CROWLEY: And I'm picking that up, too, and some anger at the president. They feel that, particularly on the House side, that they, kind of, walked out on that limb; it got sawed off by the Senate, and they got no help from this president. And they're worried he's going to cave even further.

DUFFY: It's not clear yet that either side has really completely... (LAUGHTER)

... I guess, digested the meaning of Tuesday. We're only five days out of this. Democrats keep saying -- you just heard them say a few minutes ago this isn't about the policy; it's about the communication. President Obama said that on Wednesday morning, when you really have the sense it really was about the policy.

And so -- but it takes a long time, I think, for all of -- whenever we have -- you saw the three different presidents go through their own, you know, reckoning with defeat. It takes all of them some time, months, actually, to reposition themselves for the next round. And we're just at the beginning of that.

TUMULTY: So you don't, by the way, have a lot of time. I mean, this is the third election in a row where voters have decided to kick somebody to the curb.

CROWLEY: Right.

TUMULTY: And so they also, at the same time, know that they've got to produce and they've got to get it right very, very quickly.

CROWLEY: I want to turn to the Republicans and how they're seeing this election. This is from Eric Cantor in a letter to House Republicans.

"If all of Obamacare cannot be immediately repealed, then it is my intention to begin repealing it piece by piece, blocking funding for its implementation and blocking the issuance of the regulations necessary to implement it. In short, it is my intention to use every tool at our disposal to achieve full repeal of Obamacare."

Whoa. You know, we saw the polling. There's not -- there isn't a consensus that that ought to be what happened. Overplaying their...

DUFFY: I think that's a really good question. You know, even John Boehner, who's been more conciliatory than some of the other Republicans, said, if we can't repeal it, we're going to dent it, knock it, slow it down.

What we don't know yet is whether this is post-game pep rally, reminding the troops they did a great job and we're going to stay in it, whether they really intend to or not. Because there's really no way they can repeal it, given all the ways that the Democrats can bottle it up.

TUMULTY: But as a result, I think it's partly they're framing their message for 2012, when they can elect somebody...

CROWLEY: Well, that's, sort of, the same thing. Is this, sort of, a post -- kind of, thank you guys so much, on both sides?

TUMULTY: The other thing to watch is not only what happens to the health care overhaul in Washington, but out in the states, because it is this gigantic new crop of Republican governors who are going to be charged with implementing it. And don't forget all those lawsuits that are still going forward as well.

DUFFY: Twenty states already, and there will probably be more states that join it now that more states are being run by Republicans.

CROWLEY: In fact, Speaker -- soon-to-be Speaker Boehner sent that letter to governors going, OK, we can all work together to do this, and it was just, sort of, code for stop health care reform at the state level, it seems to me.

Let me ask you about Jim DeMint, big Tea Party supporter with both money, endorsements, didn't do quite as well in the Senate as I'm sure he would like to. He had this to say Wednesday in The Wall Street Journal.

"The next campaign begins today because you must now overcome determined party insiders if this nation is going to be spared from fiscal disaster. The establishment is much more likely to try to buy off your votes than to buy into your limited-government philosophy."

How much of a pain is Jim DeMint going to be for Minority Leader McConnell and other Republicans?

TUMULTY: I think that what he represents is going to be an enormous influence. Because I think the tea party influence is not the number of Tea Party members who got elected but the fact that they have put every single Republican in Congress on notice that they've got to keep looking over their shoulders. And especially any vote where something involving money is involved, the only safe vote for a Republican is going to be no.

DUFFY: It's another reason why the rhetoric, I think, in the Post in the last couple of days has been so great, so strident from the Republicans, is they know they have this group of folks coming to town and they don't want them to get away; they don't want them to break away. But we still have a civil war going on, on the Republican side, even so they -- even though they were victorious.

CROWLEY: So it's more of a "Come on in, Tea Party folks; we're the same way you are." Because it's a difference between...

DUFFY: "We like the same music."

CROWLEY: Right.

DUFFY: "We like the same music. We really do."

(LAUGHTER)

CROWLEY: There's a difference between that and when you have to start singing the song.

TUMULTY: Right.

(LAUGHTER)

DUFFY: They're some weeks -- months away from that. CROWLEY: Yes. Let me turn to the battle inside the Democratic Party on the House side with now-Speaker Pelosi saying, "I want to be majority leader." She wouldn't have said it if she didn't have the votes.

We do have a bit of a fight about the number two position in the Democratic Party, but I want to also read you something that Heath Shuler, very conservative, I mean, basically a Democrat in name only if there is such a name for that, from North Carolina, talking about recruitment of Democratic candidates -- "I can go recruit moderate members to run in swing districts. I could do it better than she could, and that's what it's going to take. It's going to take moderate candidates to win back those seats."

So we do hear this sort of rumbling from the minority moderate Democrats in the party, but is it a minus in recruitment for Nancy Pelosi to still be the head of the Democratic Party when they lost the entire Midwest?

DUFFY: You know that it's a minus because the people who are happiest this morning are the Republicans, and they recently ran a bus tour saying "Fire Pelosi." That worked out pretty well for them. Now they've got a sign over their headquarters across the Hill that says "Hire Pelosi." They're just praying that they do -- that the Democrats take this step, though she does have the best fund-raising networks and she apparently has the votes.

But they have -- they have recruited moderates before. Rahm Emanuel, when he was in charge of the group that Chris van Hollen is now in charge of, did a great job of -- of hiring moderate candidates, and they won with them. So it can be done.

CROWLEY: And -- and I also heard these rumblings of Democrats and how they feel about President Obama, is they think that Speaker Pelosi is precisely the person to, kind of, push up against what they expect to be a president who is, kind of, if not backpedaling at least trying to work around the edges of some of the legislation they passed and paid for in the polls.

TUMULTY: Well, and there will come those moments where it will be in the Democrats' interest to draw the distinctions with the Republicans rather than trying to compromise with them.

TUMULTY: And I think those moments are going to come as John Boehner tries to implement his one specific campaign promise, which was to cut $100 billion from spending next year. That sounds like a great goal, it sounds -- it has certainly got a lot of support, but when you start doing it line by line, you run into some problems.

DUFFY: And if we were heading toward a period here of reconciliation and working together across party lines, and you may -- you might think that Nancy Pelosi wasn't the best choice, but we're not. We're heading toward a period of gridlock and continued dysfunction in Washington. And that -- and we were doing that even before she made her decision on Friday.

CROWLEY: So yes or no, because we're running out of time here, gridlock?

TUMULTY: Mostly.

CROWLEY: Mostly gridlock. Do you agree with that?

DUFFY: Mostly plus. I'm a little more than mostly.

(LAUGHTER)

CROWLEY: A little more than mostly. So basically we're setting up the next election on the House side is essentially what's going to happen. If there's going to be compromise, it will happen in the Senate.

Up next, a check of today's top stories and then, training for the New York City Marathon while 2,300 feet underground.

(COMMERCIAL BREAK) CROWLEY: Now time for a check of today's top stories. President Obama says Pakistan isn't making progress against militants as quickly as the United States would like. The president, speaking today at a town hall in India, said Pakistan has a lot of potential but also has extremist elements that have to be addressed. President Obama's visit to India is part of a 10-day tour in Asia. And in India, the president and first lady also found time for a bit of fun. The couple took part today in some dance moves during a celebration, a Diwali festival of lights.

The United States is reportedly deploying Predator drones in Yemen to hunt for al Qaeda operatives. That according to The Washington Post. The Post also reports no missiles have been fired yet.

U.S. Defense Secretary Robert Gates today said he wants the lame duck Congress to repeal the military's ban on gays and lesbians serving openly. He concedes the prospects for Congress acting are unclear. Yesterday, the commandant of the Marine Corps, General James Amos, said, now is the wrong time to overturn "Don't Ask/Don't Tell."

And Hurricane Tomas has killed six people in Haiti and left a trail of destroyed homes. The storm is moving away from land into the Atlantic Ocean, but mudslides remain a threat in Haiti, which is still dealing with the effects of a January earthquake.

And those are your top stories here on STATE OF THE UNION. Up next, the Chilean miner who is going from one marathon to the next.

(COMMERCIAL BREAK)

CROWLEY: We couldn't leave you without checking in on the running, singing, Chilean miner who is participating in the New York Marathon today. A story we couldn't make up or pass up. Edison Pena was the 12th of 33 Chilean miners rescued after 69 days underground. He kept his spirits up, running up to six miles a day in the dark of the mine. Pena says listening to Elvis on his iPod helped him power through the runs. It is the only English he knows.

CROWLEY: Pena seems to be running better than he sings. He began his race a short time ago and is on the course. We will keep you posted on his progress.

In the meantime, thank you for watching STATE OF THE UNION. Joe Johns will be here next Sunday morning while I'm on assignment for our prime time special "Bush: Two Years Later," an interview with former President George W. Bush and his brother Jeb. That is next Sunday night at 8:00 p.m. Eastern. Until then I'm Candy Crowley in Washington. Thanks for joining us. Up next for our viewers here in the United States, "FAREED ZAKARIA: GPS."